By Marylou Andrew
When a bank changes its name, it usually implies a change in ownership, a merger or an acquisition. None of the above is precisely true in the case of the recently rebranded Burj Bank.
Formerly known as Dawood Islamic Bank (DIB), Burj Bank was created when two of DIB’s Middle Eastern investors – Islamic Corporation for Development of the Private Sector, Jeddah and Unicorn Investment Bank, Bahrain – decided to inject fresh capital into what had been a struggling enterprise for the last two years. According to insider sources, DIB’s growth began to stagnate from 2008 onwards, incurring losses worth Rs 536 million in 2010.
The fresh capital injection of about $21 million (two billion rupees) ensured that the bank would meet the minimum capital requirements laid down by the State Bank of Pakistan (SBP) and gave the Middle Eastern investors a 70% controlling interest in the bank. (This is reflected in the name, as burj is the Arabic word for tower.)
Pervez Said, CEO, Burj Bank explains that “Dawood Islamic Bank had strong connotations of being a Pakistani bank, which we are not, so we needed a brand name that reflected our product. Burj connotes height and our vision is to take the bank to the heights of Islamic banking; in fact we want to set a new standard for Islamic banking in Pakistan.”
Changing the name is obviously not enough to jumpstart growth, particularly when Burj Bank has one of the smallest asset bases in Pakistan (Rs 18 billion) and operates in a niche category within banking, i.e. Islamic banking. Although Islamic banking has garnered a seven percent market share since its introduction in Pakistan nine years ago (a significant achievement compared to a country like Malaysia which only managed a 12% share in 25 years), sustaining the momentum will depend on diversifying product offerings rather than replicating conventional banking products.
Said is aware of these realities and cognisant of the challenges Islamic banks face
in Pakistan.
“First, Islamic banks have small balance sheets and therefore a limited capacity for shock absorbency, which makes us risk averse. Secondly, Islamic banking is fairly new, therefore a lot of our internal structures have to be developed from scratch; we cannot borrow them from elsewhere.”
However, the opportunities are equally significant, particularly in terms of customer growth. According to Said, 20% of the population is not open to Islamic banking; some because they believe there is no concept of banking in Islam, others because they are satisfied with conventional banking services. However, the remaining 80% of the population is open to banking that offers Islamic finance.
The problem, says Said, is that most Islamic banks do not have the capacity to cater to such a large target audience, although Burj Bank is poised to give it a shot. The idea is to do things differently. For example, instead of brick and mortar branch expansion only, Said wants to focus on branchless banking and technology-based solutions.
In terms of target market, Burj has decided on what Said terms a ‘shotgun approach’, which will take into account two broad categories of consumers. First, the people who are outside the banking system because they believe it is haram, and second, the people who are part of the conventional banking system but will be attracted to Burj Bank because it offers ‘blessings’ for their wealth.
“Islamic banking is a challenging category,” says Said, “because the appeal is belief-based. However, if you try to sell people a stairway to heaven, they will shy away from it. Instead, we are appealing to people’s emotions by asking them to do something in line with their beliefs.”
Focus group discussions with several businessmen revealed a belief that went something like this: ‘when we switch from conventional to Islamic banking, our wealth and business is blessed by God.’
Keeping this in mind, Burj Bank’s tagline ‘Shariat mein barkat’ encompasses what Said calls a marketing approach to Islamic banking.
“Every Islamic bank offers pretty much the same products and services; what makes us different is that we are not selling banking, we are selling blessings.”
Burj Bank’s launch campaign uses green (the standard colour for Islamic banking advertising in Pakistan) to present a clean logo with an Arabic inspired script. The logo has four points outlining the bank’s credo: purity, integrity, passion and devotion.
Ali A. Rizvi, COO, Interflow Communications (Burj Bank’s newly-appointed creative and media agency) explains that while Burj Bank’s guiding principles are based on the Shari’ah, the advertising is extremely modern.
“Some people are wary about Islamic banking because they do not really understand how it works. With this campaign, we are trying to introduce Burj Bank in a positive light. Future campaigns will emphasise that while the bank is Shari’ah-compliant, it is not traditional. In fact there is no reason why the Shari’ah cannot be adapted to modern life.”
Said says the objective is to make Burj Bank accessible to all groups of people, regardless of their faith and creed.
“We want to offer innovative products and services so that regardless of whether our customers are Christian, Muslim or Hindu, they will have peace of mind when they bank with us, knowing that their money will be blessed. If they believe in our positioning and we can communicate it properly, they will remain our customers.”
Banking analysts question whether this is too lofty a goal for an Islamic bank with an extremely small paid-up capital and asset base. Of course, much will depend on educating people about the inherent value of Islamic banking. There is clearly room for growth in the Islamic banking sector, as evidenced by the growing number of players. However, will the average customer buy into Burj’s positioning of ‘selling blessings’?
First published in the September-October 2011 issue of Aurora.
